BLACKBERRY Ltd 10-Q, filed Sep 23, 2021

BLACKBERRY Ltd (BB)

10-Q 2021-09-23 For: 2021-08-31

Added on April 08, 2026

About this 10-Q

BLACKBERRY Ltd filed this 10-Q on September 23, 2021, covering the quarter ended August 31, 2021.

Headline figures

Quarter ended August 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $175M; down 32.4% from $259M a year earlier
Net loss: $144M; compared with a net loss of $23M a year earlier
Diluted EPS: -$0.25; compared with -$0.04 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	BB	New York Stock Exchange
Common Shares	BB	Toronto Stock Exchange


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	o	Smaller reporting company	☐
		Emerging growth company	☐


BLACKBERRY LIMITED

TABLE OF CONTENTS
		Page No.
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Consolidated Balance Sheets as of August 31, 2021 (unaudited) and February 28, 2021	5
	Consolidated Statements of Shareholders' Equity - Three and Six Months Ended August 31, 2021 and 2020 (unaudited)	7
	Consolidated Statements of Operations - Three and Six Months Ended August 31, 2021 and 2020 (unaudited)	8
	Consolidated Statements of Comprehensive Loss - Three and Six Months Ended August 31, 2021 and 2020 (unaudited)	9
	Consolidated Statements of Cash Flows - Six Months Ended August 31, 2021 and 2020 (unaudited)	10
	Notes to the Consolidated Financial Statements	11
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3	Quantitative and Qualitative Disclosures about Market Risk	58
Item 4	Controls and Procedures	59

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	59

Item 6	Exhibits	59
Signatures		60


	As at
	August 31, 2021		February 28, 2021
Assets
Current
Cash and cash equivalents (note 3)	$	291	$	214
Short-term investments (note 3)	416		525
Accounts receivable, net of allowance of $9 and $10, respectively (note 4)	121		182
Other receivables	23		25

Income taxes receivable	9		10
Other current assets (note 4)	50		50
	910		1,006
Restricted cash equivalents and restricted short-term investments (note 3)	27		28
Long-term investments (note 3)	38		37
Other long-term assets (note 4)	13		16

Operating lease right-of-use assets, net	57		63
Property, plant and equipment, net (note 4)	44		48
Goodwill (note 4)	848		849
Intangible assets, net (note 4)	695		771

	$	2,632	$	2,818
Liabilities
Current
Accounts payable	$	22	$	20
Accrued liabilities (note 4)	174		178
Income taxes payable (note 5)	9		6

Deferred revenue, current (note 11)	198		225
	403		429
Deferred revenue, non-current (note 11)	46		69
Operating lease liabilities	79		90
Other long-term liabilities (note 4)	4		6
Long-term debentures (note 6)	782		720


	1,314		1,314
Commitments and contingencies (note 10)
Shareholders’ equity
Capital stock and additional paid-in capital
Preferred shares: authorized unlimited number of non-voting, cumulative, redeemable and retractable	—		—
Common shares: authorized unlimited number of non-voting, redeemable, retractable Class A common shares and unlimited number of voting common shares
Issued - 566,994,978 voting common shares (February 28, 2021 - 565,505,328 )	2,845		2,823
Deficit	(1,512)		(1,306)
Accumulated other comprehensive loss (note 9)	(15)		(13)
	1,318		1,504
	$	2,632	$	2,818


John S. Chen			Barbara Stymiest
Director			Director


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended August 31, 2021
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total
Balance as at May 31, 2021	$	2,834	$	(1,368)	$	(10)	$	1,456
Net loss	—		(144)		—		(144)
Other comprehensive loss	—		—		(5)		(5)

Stock-based compensation	10		—		—		10
Shares issued:
Exercise of stock options	1		—		—		1


Balance as at August 31, 2021	$	2,845	$	(1,512)	$	(15)	$	1,318


	Three Months Ended August 31, 2020
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total
Balance as at May 31, 2020	$	2,777	$	(838)	$	(26)	$	1,913
Net loss	—		(23)		—		(23)
Other comprehensive income	—		—		13		13

Stock-based compensation	9		—		—		9
Shares issued:
Exercise of stock options	2		—		—		2


Balance as at August 31, 2020	$	2,788	$	(861)	$	(13)	$	1,914


	Six Months Ended August 31, 2021
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total























Balance as at February 28, 2021	$	2,823	$	(1,306)	$	(13)	$	1,504
Net loss	—		(206)		—		(206)
Other comprehensive loss	—		—		(2)		(2)

Stock-based compensation (note 7)	17		—		—		17
Shares issued:
Exercise of stock options (note 7)	2		—		—		2

Employee share purchase plan (note 7)	3		—		—		3
Balance as at August 31, 2021	$	2,845	$	(1,512)	$	(15)	$	1,318


	Six Months Ended August 31, 2020
	Capital Stock and Additional Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss		Total























Balance as at February 29, 2020	$	2,760	$	(198)	$	(33)	$	2,529
Net loss	—		(659)		—		(659)
Other comprehensive income	—		—		20		20
Cumulative impact of adoption of ASC 326	—		(4)		—		(4)
Stock-based compensation	22		—		—		22
Shares issued:
Exercise of stock options	3		—		—		3

Employee share purchase plan	3		—		—		3
Balance as at August 31, 2020	$	2,788	$	(861)	$	(13)	$	1,914


	Three Months Ended				Six Months Ended
	August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Revenue (note 11)	$	175	$	259	$	349	$	465
Cost of sales	63		60		123		123

Gross margin	112		199		226		342

Operating expenses
Research and development	58		57		115		114
Selling, marketing and administration	83		79		156		169
Amortization	45		46		91		92
Impairment of goodwill (note 3)	—		—		—		594
Impairment of long-lived assets	—		21		—		21

Debentures fair value adjustment (note 6)	67		18		63		19

	253		221		425		1,009
Operating loss	(141)		(22)		(199)		(667)
Investment loss, net	(1)		(5)		(3)		(5)
Loss before income taxes	(142)		(27)		(202)		(672)
Provision for (recovery of) income taxes (note 5)	2		(4)		4		(13)


Net loss	$	(144)	$	(23)	$	(206)	$	(659)
Loss per share (note 8)
Basic	$	(0.25)	$	(0.04)	$	(0.36)	$	(1.18)
Diluted	$	(0.25)	$	(0.04)	$	(0.36)	$	(1.18)


	Cost Basis		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Restricted Cash Equivalents
Bank balances	$	95	$	—	$	95	$	95	$	—	$	—	$	—
Other investments	38		—		38		—		—		38		—
	133		—		133		95		—		38		—
Level 1:

Equity securities	10		(8)		2		—		2		—		—


Level 2:
Term deposits, certificates of deposits, and GIC's	164		—		164		45		92		—		27
Bankers’ acceptances/bearer deposit notes	42		—		42		34		8		—		—
Commercial paper	256		—		256		84		172		—		—
Non-U.S. promissory notes	81		—		81		20		61		—		—

Non-U.S. government sponsored enterprise notes	77		—		77		—		77		—		—
Non-U.S. treasury bills/notes	13		—		13		13		—		—		—

Corporate notes/bonds	4		—		4		—		4		—		—
	637		—		637		196		414		—		27





	$	780	$	(8)	$	772	$	291	$	416	$	38	$	27


	As at
	August 31, 2021
Beginning balance as of February 29, 2020	$	9
Impact of adopting ASC 326	4
Prior period recovery for expected credit losses	(3)
Ending balance of the allowance for credit loss as at February 28, 2021	10

Current period recovery for expected credit losses	(1)


Ending balance of the allowance for credit loss as at August 31, 2021	$	9


	As at August 31, 2021
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,023	$	747	$	276
Intellectual property	500		314		186
Other acquired intangibles	494		261		233
	$	2,017	$	1,322	$	695


	Carrying Amount
Carrying amount as at February 29, 2020	$	1,437
Goodwill impairment charge (see note 3)	(594)
Effect of foreign exchange on non-U.S. dollar denominated goodwill	6
Carrying amount as at February 28, 2021	849


Effect of foreign exchange on non-U.S. dollar denominated goodwill	(1)
Carrying amount as at August 31, 2021	$	848


	Three Months Ended						Six Months Ended
	August 31, 2021			August 31, 2020			August 31, 2021			August 31, 2020
North America (1)	$	101		$	195		$	212		$	345
Europe, Middle East and Africa	57			48			102			89
Other regions	17			16			35			31

Total	$	175		$	259		$	349		$	465

North America (1)	57.7		%	75.3		%	60.8		%	74.2		%
Europe, Middle East and Africa	32.6		%	18.5		%	29.2		%	19.1		%
Other regions	9.7		%	6.2		%	10.0		%	6.7		%
Total	100.0		%	100.0		%	100.0		%	100.0		%


	Accounts Receivable		Deferred Revenue		Deferred Commissions
Opening balance as at February 28, 2021	$	188	$	294	$	21
Increases due to invoicing of new or existing contracts, associated contract acquisition costs, or other	314		256		10
Decrease due to payment, fulfillment of performance obligations, or other	(376)		(306)		(13)

Decrease, net	(62)		(50)		(3)
Closing balance as at August 31, 2021	$	126	$	244	$	18


	As at August 31, 2021
	Less than 12 Months		12 to 24 Months		Thereafter		Total
Remaining performance obligations	$	213	$	36	$	15	$	264


	As at February 28, 2021
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,023	$	712	$	311
Intellectual property	498		299		199
Other acquired intangibles	494		233		261
	$	2,015	$	1,244	$	771


	Capital Stock and Additional Paid-in Capital
	Stock Outstanding (000s)	Amount
Common shares outstanding as at February 28, 2021	565,505	$	2,823
Exercise of stock options	379	2
Common shares issued for restricted share unit settlements	732	—
Stock-based compensation	—	17






Common shares issued for employee share purchase plan	379	3
Common shares outstanding as at August 31, 2021	566,995	$	2,845


	For the Three Months Ended
	Cyber Security				IoT			Licensing and Other		Segment Totals
	August 31, 2021		August 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Segment revenue	$	120	$	120		$	40	$	31	$	15	$	108	$	175	$	259
Segment cost of sales	49		46			7		6		6		7		62		59
Segment gross margin (1)	$	71	$	74		$	33	$	25	$	9	$	101	$	113	$	200

	For the Six Months Ended
	Cyber Security				IoT			Licensing and Other		Segment Totals
	August 31, 2021		August 31, 2020			August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020		August 31, 2021		August 31, 2020
Segment revenue	$	227	$	239		$	83	$	60	$	39	$	166	$	349	$	465
Segment cost of sales	95		93			14		12		12		15		121		120
Segment gross margin (1)	$	132	$	146		$	69	$	48	$	27	$	151	$	228	$	345


	For the Three Months Ended (in millions, except for share and per share amounts)
	August 31, 2021		August 31, 2020		Change
Revenue	$	175	$	259	$	(84)
Gross margin	112		199		(87)
Operating expenses	253		221		32
Investment loss, net	(1)		(5)		4
Loss before income taxes	(142)		(27)		(115)
Provision for (recovery of) income taxes	2		(4)		6
Net loss	$	(144)	$	(23)	$	(121)
Loss per share - reported
Basic	$	(0.25)	$	(0.04)
Diluted	$	(0.25)	$	(0.04)

Weighted-average number of shares outstanding (000’s)
Basic (1)	568,082		558,882
Diluted (2)	568,082		558,882


	For the Three Months Ended (in millions)
	Cyber Security						IoT						Licensing and Other						Segment Totals
	August 31, 2021		August 31, 2020		Change		August 31, 2021		August 31, 2020		Change		August 31, 2021		August 31, 2020		Change		August 31, 2021		August 31, 2020		Change
Segment revenue	$	120	$	120	$	—	$	40	$	31	$	9	$	15	$	108	$	(93)	$	175	$	259	$	(84)
Segment cost of sales	49		46		3		7		6		1		6		7		(1)		62		59		3
Segment gross margin	$	71	$	74	$	(3)	$	33	$	25	$	8	$	9	$	101	$	(92)	$	113	$	200	$	(87)


	For the Six Months Ended
	(in millions)
	Cyber Security						IoT						Licensing and Other						Segment Totals
	August 31, 2021		August 31, 2020		Change		August 31, 2021		August 31, 2020		Change		August 31, 2021		August 31, 2020		Change		August 31, 2021		August 31, 2020		Change
Segment revenue	$	227	$	239	$	(12)	$	83	$	60	$	23	$	39	$	166	$	(127)	$	349	$	465	$	(116)
Segment cost of sales	95		93		2		14		12		2		12		15		(3)		121		120		1
Segment gross margin	$	132	$	146	$	(14)	$	69	$	48	$	21	$	27	$	151	$	(124)	$	228	$	345	$	(117)


	For the Three Months Ended August 31, 2021
	(in millions)
	Cyber Security		IoT		Licensing and Other		Segment Totals		Reconciling Items		Consolidated U.S. GAAP
Revenue	$	120	$	40	$	15	$	175	$	—	$	175
Cost of sales (1)	49		7		6		62		1		63
Gross margin	$	71	$	33	$	9	$	113	$	(1)	$	112
Operating expenses									253		253
Investment loss, net									1		1
Loss before income taxes											$	(142)

	For the Six Months Ended August 31, 2021
	(in millions)
	Cyber Security		IoT		Licensing and Other		Segment Totals		Reconciling Items		Consolidated U.S. GAAP
Revenue	$	227	$	83	$	39	$	349	$	—	$	349
Cost of sales (1)	95		14		12		121		2		123
Gross margin	$	132	$	69	$	27	$	228	$	(2)	$	226
Operating expenses									425		425
Investment loss, net									3		3
Loss before income taxes											$	(202)


For the Three Months Ended (in millions)	August 31, 2021			August 31, 2020




Gross margin	$	112		$	199



Stock compensation expense	1			1
Adjusted gross margin	$	113		$	200

Gross margin %	64.0		%	76.8		%



Stock compensation expense	0.6		%	0.4		%
Adjusted gross margin %	64.6		%	77.2		%


For the Three Months Ended (in millions)	August 31, 2021		May 31, 2021		August 31, 2020
Operating expense	$	253	$	172	$	221
Restructuring charges	—		—		1
Stock compensation expense	11		6		8
Debentures fair value adjustment (1)	67		(4)		18

Acquired intangibles amortization	32		32		32


LLA impairment charge	—		—		21


Adjusted operating expense	$	143	$	138	$	141


For the Three Months Ended (in millions, except per share amounts)	August 31, 2021			August 31, 2020
			Basic loss per share			Basic earnings (loss) per share
Net loss	$	(144)	$(0.25)	$	(23)	$(0.04)


Restructuring charges	—			1
Stock compensation expense	12			9
Debentures fair value adjustment	67			18

Acquired intangibles amortization	32			32


LLA impairment charge	—			21



Adjusted net income (loss)	$	(33)	$(0.06)	$	58	$0.10


For the Six Months Ended (in millions)	August 31, 2021			August 31, 2020




Gross margin	$	226		$	342



Stock compensation expense	2			3
Adjusted gross margin	$	228		$	345

Gross margin %	64.8		%	73.5		%



Stock compensation expense	0.5		%	0.7		%
Adjusted gross margin %	65.3		%	74.2		%

Operating expense	$	425		$	1,009
Restructuring charges	—			2
Stock compensation expense	17			20
Debentures fair value adjustment (1)	63			19

Acquired intangibles amortization	64			65

Goodwill impairment charge	—			594
LLA impairment charge	—			21


Adjusted operating expense	$	281		$	288


For the Six Months Ended (in millions, except per share amounts)	August 31, 2021			August 31, 2020
			Basic loss per share			Basic earnings (loss) per share
Net loss	$	(206)	$(0.36)	$	(659)	$(1.18)


Restructuring charges	—			2
Stock compensation expense	19			23
Debentures fair value adjustment	63			19

Acquired intangibles amortization	64			65

Goodwill impairment charge	—			594
LLA impairment charge	—			21



Adjusted net income (loss)	$	(60)	$(0.11)	$	65	$0.12


	For the Three Months Ended (in millions)
	Included in Operating Expense
	August 31, 2021		August 31, 2020		Change
Property, plant and equipment	$	3	$	5	$	(2)
Intangible assets	42		41		1
Total	$	45	$	46	$	(1)

	Included in Cost of Sales
	August 31, 2021		August 31, 2020		Change
Property, plant and equipment	$	1	$	1	$	—
Intangible assets	2		3		(1)
Total	$	3	$	4	$	(1)


	For the Six Months Ended
	(in millions, except for share and per share amounts)
	August 31, 2021		August 31, 2020	Change
Revenue	$	349		$	465	$	(116)
Gross margin	226			342		(116)
Operating expenses	425			1,009		(584)
Investment loss, net	(3)			(5)		2
Loss before income taxes	(202)			(672)		470
Provision for (recovery of) income taxes	4			(13)		17


Net loss	$	(206)		$	(659)	$	453
Loss per share - reported
Basic	$	(0.36)		$	(1.18)	$	0.82
Diluted	$	(0.36)		$	(1.18)	$	0.82

Weighted-average number of shares outstanding (000’s)
Basic (1)	567,724			558,365
Diluted (2)	567,724			558,365


	As at (in millions)
	August 31, 2021		February 28, 2021		Change
Cash and cash equivalents	$	291	$	214	$	77
Restricted cash equivalents and restricted short-term investments	27		28		(1)
Short-term investments	416		525		(109)
Long-term investments	38		37		1
Cash, cash equivalents, and investments	$	772	$	804	$	(32)


	(in millions)
	Total		Less than One Year		One to Three Years		Four to Five Years		Greater than Five Years
Operating lease obligations	$	118	$	34	$	45	$	26	$	13
Purchase obligations and commitments	162		114		48
Debt interest and principal payments	381		6		375
Total	$	661	$	154	$	468	$	26	$	13


Exhibit Number						Description of Exhibit




31.1*						Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a)
31.2*						Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a)
32.1†						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2†						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



101*						XBRL Instance Document – the document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101*						Inline XBRL Taxonomy Extension Schema Document
101*						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101*						Inline XBRL Taxonomy Extension Definition Linkbase Document
101*						Inline XBRL Taxonomy Extension Label Linkbase Document
101*						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File – formatted as Inline XBRL and contained in Exhibit 101


	BLACKBERRY LIMITED

Date: September 23, 2021	By:	/s/ John Chen
	Name:	John Chen
	Title:	Chief Executive Officer

	By:	/s/ Steve Rai
	Name:	Steve Rai
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)


Date: September 23, 2021			/s/ John Chen
			Name: John Chen
			Title: Chief Executive Officer


Date: September 23, 2021			/s/ Steve Rai
			Name: Steve Rai
			Title: Chief Financial Officer